10/16/2012

FORT WALTON BEACH, Fla. – The Air Force has not had a permanent senior acquisition executive in more than three years. The job of assistant secretary for acquisition remains vacant, and likely will stay that way until a new administration takes charge next year.

But that hasn't stopped the Air Force's massive weapons industrial complex from accomplishing a sweeping reorganization over the past year. Twelve major bureaucracies that oversaw weapons programs have been consolidated into five. Hundreds of jobs have been eliminated. Responsibilities have been reassigned.

The latest overhaul of the Air Force's weapons business has two key goals: Save money and speed up the acquisitions process, said Maj. Gen. Ken Merchant, program executive officer for weapons.

Merchant oversees a $60 billion weapons portfolio that includes most of the Pentagon's key air warfare systems. He used to have dual responsibilities as weapons program executive officer and as commander of the Air Armaments Center, based at Eglin Air Force Base, Fla. Under the new scheme, Merchant only serves as PEO. He used to report directly to the four-star head of Air Force Materiel Command, at Wright-Patterson Air Force Base, Ohio. Merchant now falls under the new Life Cycle Management Center led by a three-star officer, Lt. Gen. C.D. Moore II.

The organizational charts are eye-glazing. But the rationale for the change is simple: There were too many layers of management with overlapping functions. The new chain of command officially was put in place July 18, but the downsizing started in November 2011.

The Air Force estimated it will save $109 million a year. “It doesn't go a long way to settling the national debt, but every little bit helps,” Merchant said Oct. 16 in a speech to the 38th Air Armaments Symposium at the Emerald Coast Convention Center.

Air Force Materiel Command has shed about 1,050 workers, 440 of whom came from Eglin, Merchant said.

- The Air Force Sustainment Center at Tinker Air Force Base, Okla., is in charge of weapons support and maintenance.

- The Air Force Test Center, at Edwards Air Force Base, Calif., takes over weapons testing that was previously spread across multiple organizations.

- The Air Force Research Laboratory at Wright-Patterson manages science programs.

- The Air Force Nuclear Weapons Center at Kirtland Air Force Base, N.M., is in charge of both procurement and maintenance of nuclear weapons.

By law, all military acquisition programs must be managed by senior civilians on the Pentagon staff. That will not change, even though the Air Force senior acquisition executive position currently is vacant, and Secretary Michael Donley is temporarily filling in.

The Air Force Materiel Command, run by Gen. Janet Wolfenbarger, is responsible for more than 40 percent of the Air Force's budget.

Wolfenbarger said the current budget environment spurred change that was needed regardless. Under its 12-center makeup, AFMC had become undisciplined, and each center made decisions based on parochial interests, rather than on what is best for the entire Air Force, she said in a speech at the symposium.

Having multiple organizations do the same mission at different Air Force bases not only adds cost but also slows down the delivery of weapon systems, said Wolfenbarger. Under the five-center AFMC setup, each one is responsible for a single mission across multiple geographic locations, she said. “The fiscal environment was an opportunity to do things better.”

Merchant, who has served on active duty for 32 years, most of which overseeing weapons programs, believes this reorganization has the potential to save the Air Force billions of dollars not just from personnel cuts for also from savings in logistics and maintenance costs.

“In the logistics business is where the command stands to have its biggest gains,” he said. The Air Force's huge maintenance depots at Tinker, Hill Air Force Base in Utah, and Warner-Robbins in Georgia, typically compete against each other for weapon repair work, and each operates under different rules and business processes, said Merchant. Consolidating these depots under a single “sustainment center” should make the equipment-maintenance business more efficient and encourage the depots to work together, he said. “We are trying to get unity across life cycle management.”

Such unity has not existed thus far, Merchant said. As a result, acquisition managers only worry about the cost of buying a piece of equipment, and not necessarily about the long-term expenses of maintaining the system. That culture is not helpful because the majority of a weapon's cost occurs after production, said Merchant. The Air Force keeps most aircraft in service for several decades. “If we're not putting that focus upfront, we are missing opportunities to save money,” Merchant said.

But he acknowledged the new reporting chain is a “little convoluted” and it could take some time for the bureaucracy to change its silo-based mindset. “We are working through a lot of those things,” said Merchant.

There are still concerns that these changes might not magically cure long-time acquisition ills. The Air Force over the past several decades has overhauled its acquisition business multiple times, and many of the same problems persist: It takes too long to deliver new systems, costs keep rising, and there are shortages of suppliers of niche components.

Case in point are recent troubles obtaining rocket motors for the Air Force's advanced medium-range air-to-air missile, Merchant said. In the absence of a U.S. manufacturer, the Air Force sought a Norwegian firm to make rocket motors using cases made by U.S. supplier ATK.

It took two years to find a qualified vendor, during which time production of AMRAAM had to be suspended by prime contractor Raytheon, Merchant said. Securing an overseas supplier will “give us capabilities to start producing missiles again,” he said. “It's been a fight, and we're not out of the woods yet.”

Another supply chain headache is fuzes – critical ignition devices without which bombs and missiles are unusable. The Air Force's fuze inventory is dwindling, and is not being replenished, Merchant said. “In a few years, I may not have a fuze to stick on the tail of the weapon.” The Air Force received extra funding to buy more fuzes, but the shortage of suppliers means the Air Force is paying premium prices, and is going to have to reduce the quantities it buys. The solution would be more market competition, he said. The Air Force will be hosting a “fuze industry day” this month in an effort to recruit suppliers. “We need to get them [fuzes] cheaper, get more people interested in building fuzes.” The same problem is seen in the inventories of flares and chaff, which are munitions that combat aviators use to fend off enemy missiles. The inventories are not adequate, he said. “We have to fix these industrial base problems. We tend to focus on sexier missiles and bombs, and we forget about these meat and potatoes issues we have.”

Similar industrial troubles could affect Air Force plans to modernize weapons and develop new generations of smart munitions, Merchant said. The Air Force is preparing for a future battlefield where enemies will seek to jam GPS signals so U.S. Bombs won't be able to find their target. “How do we fight in this new environment?” Merchant asked. “We need new ideas for how to do targeting in the future.”

The Air Force would like to see its contractors break away from the traditional thinking about how weapons are developed, he said. If the goal is to design a weapons communications device that is jamming-resistant, the data link can't be more expensive than the missile, said Merchant. “It doesn't have to be a $200,000 data link. We're talking cell phone technology,” he said. “It has to be cheap.”

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